Peachtree Group and Lone Star PACE have completed an $11m Commercial Property Assessed Clean Energy (C-PACE) transaction to support the renovation of the MCM Elegante Hotel in Beaumont, Texas, US.
The hotel will be redeveloped into a dual-branded property under Marriott’s Courtyard and Element brands.
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Plans for the site include 135 rooms under the Courtyard brand and 152 rooms for extended-stay guests as part of the Element Hotel.
The financing will cover a range of building upgrades focused on energy and water efficiency.
The project scope includes installing high-efficiency building envelope materials and windows, updating HVAC [heating, ventilation and air-conditioning] systems, replacing lighting fixtures with more efficient options, and improving domestic hot water systems, along with low-flow plumbing.
Forecasts indicate these measures could result in a 29% reduction in annual energy consumption, a 39% decrease in water use, and a 30% drop in natural gas usage for the property, said Lone Star PACE.
The C-PACE funding allows property owners to undertake such efficiency improvements through a voluntary property assessment attached to the property itself.
This type of financing offers long-term, fixed-rate terms without recourse to owners and aims to improve project economics, cash flow, and asset value.
The renovation is expected to last 18 months. The hotel will remain open and fully operational throughout the construction period.
Peachtree Group originations assistant vice-president Robert Loeb said: “C-PACE plays a critical role in helping owners close the gap on projects that otherwise would not pencil in today’s environment.
“By offering a lower overall cost of capital option, C-PACE allows sponsors to move forward with renovations that might otherwise be delayed or shelved.”
According to Peachtree Group and Lone Star PACE, this transaction demonstrates the increased utilisation of C-PACE financing for adaptive reuse and significant refurbishment projects within commercial real estate.
Last week, Peachtree Group secured a $12m bridge loan and $6m in C-PACE financing to acquire and renovate the Byways Hotel Portfolio, a collection of three historic hotels in Alpine and Fort Davis, Texas.
